Autodecide

Shopping For the Best Auto Loans at Credit Unions

August 3, 2008 on 7:06 pm | In automobile purchase, decision analysis | No Comments

Before going to a dealership, make sure you get pre-approved for your car loan. Here’s what consumer advocate Clark Howard recommends:
Clark advises anybody seeking an auto loan to get pre-qualified at a credit union, which will offer lower rates than a bank.
But don’t just go to the first credit union you see. You can qualify to join many credit unions. By doing some searching, you can find the credit union which will offer you the best deal on a car loan. This post is intended to make this search easy.

Finding a Credit Union with Competitive Auto Loan Rates

A good resource to find all of your local credit unions is this Credit Union Locator. This will give you all of the credit unions near where you live. It’ll also give you the web address of each credit union. Most credit unions will list the auto loan rates on their website.
Another good resource is at BankingMyway which has a searchable database of local bank and credit union auto loan rates. If you use this, I bet you’ll notice that the best rates are from credit unions.

Joining a Credit Union
If the credit union is offering competitive rates, you’ll next want to check to see if you are eligible to join the credit union. Unlike banks, credit unions are only allowed to offer membership to certain groups or fields of membership. These can be based on employers, association memberships or where you live. Most credit union websites will include a page which describes their field of membership.
If you are eligible to join a credit union, membership typically requires a minimum balance in the credit union’s savings account (typically called a share account). This balance must be maintained to keep your credit union membership. Typically this amount ranges from $5 to $25.

Credit Unions Outside Your Area

You can be eligible to join many credit unions that may not have branches in your city. This gives you more options at finding the best rate. Some of these credit unions allow you to join online or by mail. You still have to be in their field of membership to be eligible to join. But this can often be easier than you might think. You can often qualify if you’re a member of some association that anyone can join. The association typically requires a small membership fee, but you don’t have to maintain the association membership to maintain your credit union membership.

How to Join Pentagon Federal Credit Union

A good example of this type of credit union is Pentagon Federal Credit Union. If you don’t qualify based on military, employer or family, you can become eligible by joining the National Military Family Association (NMFA). Please refer to Pentagon FCU’s How to Join overview page for details. Joining NMFA and Pentagon FCU can be done at the same time all online. The yearly membership for NMFA is $20, but your membership in the association does not need to be maintained to continue as a Pentagon FCU member (although the NMFA is a good association to support).

Car Loan Deals at Pentagon FCU

Pentagon FCU has a history of offering great . As of April 2008, the credit union has an especially good deal with a rate of 4.25% APR. This rate applies to terms from 12 to 72 months for new cars and from 12 to 60 months for used cars. This rate also applies to refinancing an auto loan.
This is an internet-only rate. Pentagon FCU sends you a blank check for the auto purchase within 2 days with limits you set when you do the online application. There have been reports that Pentagon FCU is a conservative lender who’ll typically require a decent credit score for you to qualify.
In addition to car loans, there are other reasons why you may want to join Pentagon FCU. They offer a great that pays 5% cash back for gas purchases when you pay at the pump, 2% for supermarket purchases and 1.25% on all other purchases. Pentagon FCU also offers good deals on mortgages, HELOCs and CDs.
Pentagon FCU is just one of many credit unions which provide easy nationwide membership. I’ve covered other credit unions in previous posts, which have also had great auto loan rates. In the months ahead, I’ll continue to post on more of these.